accounting essay

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As the final chapter of the study, this section provides summaries of the findings from previous chapters. The conclusion is discussed, limitations of the study are explained, and future potential researchable areas are suggested. This chapter also provides some recommendations, for the benefit of future research in this area of the study.

5.2 Summary and Conclusions

Now days, there is an increasing awareness of the corporate governance structure in Malaysian's company. It is due to the corporate governance structure that could influence the organizational internal activities of a company and could indirectly improve the performance of the company. Corporate governance structure also can bring the new outlook and enhance the effectiveness of company management. Comprehensive guidelines for corporate governance based on current corporate governance reforms have a largely redefined and reemphasized the roles and responsibilities of all the persons who take part in a public company's financial reporting process. Most especially, these improvements have intensified analysis of corporate audit committees; bring the role as protectors of investors' interests now attract considerably privileged visibility and expectations from the public. The audit committee is being as a medium between the firm's managers and the external auditor when there is any argument over accounting matters and there also being the structure that monitors the firm's financial reporting system and internal controls. The audit committee normally viewed as a monitoring instrument that can make a significant contribution within a good corporate governance framework.

This study examined the effects the of the corporate governance structure refer to the audit committee with the company performance proxies by the return on assets. Result shows that activity and financial literate of audit committee has positive significant relationship with the return on assets. It was supported by the descriptive analysis; showing that the maximum number of meeting for audit committee is 9 times per year. Moreover, according to Corporate Governance Guideline in Malaysia revised 2007, the audit committee should meet at least three times a year. As referred to that result, it can be concluded that audit committee meeting can help the company to improve the performance of a company. It is in line with the previous literature done by the Bryan et al. (2004), stated that audit committees that meet regularly to improve the transparency of reported profits to improve the quality of the profit for the company, while financial literate as well found significant and positive relationship with the return on assets. The descriptive analysis shows that majority of the company in this sample are having financial certificate from the profesional accounting bodies such as MICPA, ACCA, CIMA or CPA. From the result, knowledge in accounting turns out to be an important part for the audit committee. Changes made this are an effort to solve the agency problem between shareholders and managers. Managers sometimes do not act in the best interest of shareholders, for example, managers can manipulate the gain or even financial fraud on the shareholders. Therefore, shareholders need an effective audit committee to ensure the quality of financial reporting. The new regulations are enacted in attempting to convince the audit committee financial expertise, enabling members to monitor the financial reporting process more effectively, thus reducing agency problems between managers and shareholders.

Subsequently, analysis on the correlation matrix shows several correlations exist among the variables in the study. However, in general, the correlation is between around 0.01 until 0.2, which can be perceived as low; thus there is no severe multicollinearity problem among the regressors.

5.3 Limitations of the study

In spite of the findings, the current study suffers the following limitation. Firstly, the limitation is on the dependent variable used. This study is merely able to analyze only one company performance which is accounting measure return on assets. Other than that, another limitation is on the measures to represent dependent variables. For example, in this study only employed the accounting is measured, another measurement can be used possibly using the market based which is stock return. In addition, the independent variables used in this work is only the four audit committee characteristics, it does not take into account any external factors such as types and size of the external auditors of the company.

Next, the sample size used in this study is limited only on 169 companies in Bursa Malaysia, which represents from the four major industries in Malaysia. Hence, the result of this research is only focused to describe the overall features of the audit committee and determine the relationship between the company performances. In addition, this research uses only on one year data. Thus, this research cannot provide comparisons between years on any changes to company performance and features of the audit committee.

5.4 Recommendations for future research

In short, this study is still far from being able to explain whether the audit committee characteristics affect the company performance among Malaysian companies listed in Bursa Malaysia. Nevertheless, this study provides some insights relating to the audit committee characteristics of 169 companies in relation to the company performance. With weak support on the overall proposition and limitations of this study, the opportunities for future research are still extensive.

To avoid encountering such limitations as mentioned above, several recommendations are put forwards for future research. Firstly, future research may also incorporate other corporate characteristics or other additional audit committee characteristics such as the duality role of audit committee and the tenure of audit committee in the company. Other than that, for the company performance measurement can be considered for the market based performance such as stock return and dividen payout.

Next recommendation to set forward for future research is to extend the sample this study to cover the entire company in Bursa Malaysia, as well as taking into account all sectors within the Bursa Malaysia.

Finally, it is recommended that more years are taken into this research with a view to making comparisons between years and if there is any changes that involve variables-variables that are used.

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